The lost opportunity of the CLASS Act
Harold: Health reform is missing some key issues around community services. I’m disappointed that there’s not more outside of expanding Medicaid to help the disabled to deal with long-term care issues. It seems to me that there’s a bunch of issues that we haven’t addressed at all in health reform, or haven’t addressed well. I don’t know if that’s your feeling as well?
Sam: There are a couple of places where the Affordable Care Act did address those kinds of issues. The biggest one, that is a depressing story at the moment from my perspective, is the CLASS Act [See this conversation with Howard Gleckman], which is no more would have provided a government-sponsored long-term care insurance program that would have been geared toward services. Not in nursing homes, but in people’s homes.
For many reasons, a government-provided long-term care insurance program makes a lot of sense. If you look at the private long-term care insurance market, it’s really unraveling. You have a bunch of long-term care companies that are raising their rates substantially on existing policy holders, that are not writing policies anymore. A number of employers that used to provide long-term care policies aren’t doing it anymore because it’s getting priced out of the market, and these are needs that we’re all going to have, if we’re lucky enough to live that long.
We just are ignoring that. Some people have enough money that they don’t have to worry about this. It’s not very many people. Many people are going to end up spending down their money to have Medicaid provide this … It’s not an ideal situation.
The CLASS Act had flaws. The biggest flaw was there wasn’t a requirement of universal participation. You have this sort of adverse selection problem you have in the insurance markets, where it’s only the people who are most likely to use the service who sign up for it, and therefore that drives the prices up. That’s what we’re seeing right now in the private long-term care market.
Eventually, nobody signs up for it, or nobody can afford to sign up for it. That’s why, if there were a uniform, universal requirement of paying taxes or dare I say an employer mandate, this would make a lot of sense from a policy perspective. The Supreme Court has made it harder but not impossible to do that, but politically that just was a non-starter at the time the ACA was adopted.
Harold: It is ironic that it maybe the best example of why you’d need an individual mandate, even more than the regular insurance market. My wife and I actually purchased long-term insurance. The University of Chicago just started offering it, and it’s costing us together, for the two of us about $300 a month. I actually spoke with several of the nation’s leading long-term care experts about which boxes to check, how much coverage I should have. We were all confused.
Many of the real long-term experts told me: “Well, I’m not actually sure whether this is a good deal … whether you should wait till you’re older. There are serious questions about the stability of the market.” These are people that are advocates for long-term care insurance, who know a ton about the subject, and they are confused. Also, the premium was just much, much higher than it would have been under a mandatory program.
I covered the CLASS Act during health reform when I was writing for the New Republic. It was a very strange experience. When CLASS was legislated, it had a lot of support. Ted Kennedy was a big backer. Partly in his memory, it got pushed through, and the Congressional Budget Office gave it a pretty favorable score … And then as soon as the bill was passed, I started talking to people who said: “Oh, the CLASS Act is dead. It’s not going to go anywhere.” It was literally like a month later.
The Medicare actuary and CBO had never agreed about some of the assumptions. I never got a good story about who was right and why. The research literature was pretty shaky on this because we were headed into unknown territory with the CLASS Act.
The idea behind CLASS was appealing: You would sign up. You would pay a certain amount, $100 a month or whatever, and you would be vested after roughly five years. If you then became disabled and you needed a ramp put in your house, or you needed to have a home health care aide, or you needed some contribution towards a nursing home, under the CLASS Act you would receive some help.
There was a requirement that this had to be self-financing. Basically the Secretary of Health and Human Services could never do this. She felt that she could not, in the end, certify that this thing was financially stable. It’s been put in the freezer. It’s just a sad story …
Had CLASS imposed more strict requirements on the front end to keep out people with health problems, it would have deeply disappointed a lot of advocates, but it might have been more financially stable. We ended up with nothing. It’s been a nightmare. I’ve never gotten a clear story about why it couldn’t be fixed, why the Obama administration didn’t try to fix it … Maybe it was just something too complicated to stick into health reform, with everything else going on. It’s just a very frustrating story.
Sam: That’s right. It was something that seemed like it was always going to be a part of health reform, but also was always very controversial. It elicited just an enormous amount of negative reaction … I don’t know what happened, but it does certainly look like the administration just didn’t want to have that fight, in addition to all the other fights they’re having, as they’re trying to expand health insurance. It’s a lost opportunity.
We now have this commission that’s supposed to come forward with a plan. Anybody who’s been to Washington knows what happens with these commissions. It’s a fight that folks who care about people with disabilities know about, but we’re all going to need this. If we live long enough, we’re all going to have disabilities. That’s one of the things about the disability community. We’re all going to be a part of it, if we’re lucky. This is a place where, financially, everyone in America is going to experience the pain of not having this program.
Harold: Some of us are going to end up in institutional care. If we had different resources, we could be in our homes and out in our communities in a more humane setting, if we had the right supports in place. We could do a lot more.
Sam: That’s one of the problems with Medicaid being the default long term care provider for America. There have been lots of efforts to rebalance, restructure, or twist the system, but the basic orientation of Medicaid remains to provide care in nursing homes. Everything else is an exception to that.
The CLASS Act was promising because it recognized that actually, for a very large number of people, you don’t need that institutional care. What you need is some cheap modifications to your home. You need to pay for somebody to come to your house to help you part of the time. It’s both less expensive and more consistent with enabling people as they age or acquire disabilities to remain full members of their community, to have a program that focuses on that. Medicaid has changed through the years. It’s more like that than it used to be, but it’s still not that.